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PotashCorp profit hits record $1.24B

Potash Corp. of Saskatchewan Inc. has reaped third-quarter earnings of $1.24 billion &ndash; five times as much as a year ago and exceeding the $1.1 billion it earned in all of 2007, which was its best year to date.

Thu., Oct. 23, 2008

SASKATOON–Potash Corp. of Saskatchewan Inc. has reaped third-quarter earnings of $1.24 billion – five times as much as a year ago and exceeding the $1.1 billion it earned in all of 2007, which was its best year to date.

The July-September profit of $3.93 per share for the world's largest fertilizer producer compared with $243.1 million or 75 cents per share in the third quarter of last year.

Year-to-date earnings total $2.7 billion, "fuelled by significantly higher prices for all our potash, nitrogen and phosphate products," the company stated.

"Despite the recent onset of a global economic downturn, the need for food is not abating," commented PotashCorp CEO Bill Doyle.

"That enabled us to utilize our unique strengths in each nutrient to achieve the best quarterly performance in our history, producing record cash flow and gross margin while also preparing our company for the expected growth in potash demand."

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PotashCorp observed that the bloom is off the grain and oilseed boom amid a broad decline in commodity prices.

"By the end of the quarter, we believe lower crop prices no longer reflected the strong underlying global grain fundamentals, and fears about access to credit for agricultural buyers had a negative effect on the psychology of the sector as a whole."

As a result of "short-term uncertainty," PotashCorp said its full-year net income per share now is expected to be at the low end of its previous guidance range of $12 to $13 per share.

For the fourth quarter and next year, previously announced potash price increases are taking hold and potash fundamentals are expected to remain tight.

"Longer-term, over the next five to seven years we expect demand growth to meet or exceed the availability of new supply."

Meanwhile, "nitrogen products face the greatest immediate-term challenge from temporary deferrals of purchases," and there is downward pressure on phosphate prices, offset by lower raw-material costs and ocean freight rates.

Capital expenditures of $336.2 million were up 132 per cent from last year's third quarter, "as continued strong cash flow was reinvested in potash debottlenecking and expansion projects at our Lanigan, Patience Lake, Cory, New Brunswick and Rocanville potash facilities, and load-out expansions at Rocanville and Allan."

Full-year capital expenditures are projected at $1.2 billion.

"Although we are not immune to the global financial crisis, we believe we are uniquely sheltered by the immutable long-term need for higher global food production and the key role that potash plays in helping meet this demand," Doyle stated.

"Despite the economic turmoil, governments and farmers cannot sit on the sidelines while people wait for food."

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